If you recently became a homeowner, there are certain additional payments you will need to make in order to ensure greater security for your property. One such key investment is title insurance, which is a form of indemnity insurance that protects both homeowners and lenders from financial loss resulting from defects (issues) in a property’s title. A title is a document (e.g. a deed) that certifies legal ownership of a property.
Title insurance alone is not sufficient for a homeowner, however. A commitment is also imperative. Let’s analyze what this is and its link to title insurance.
How Does A Commitment Relate To Title Insurance?
A title commitment is the name used for a document that outlines specific aspects about a property. This document delineates the many requirements, exceptions, and exclusions for the process of issuing title insurance on a home. It also essentially serves as a promise to provide this type of insurance. As a homebuyer, you should typically be handed a title commitment prior to closing and be allowed to review it for a few days.
Why Commitments Are Important
A title commitment is crucial for two primary reasons: it lists all of the requirements for issuing title insurance and it also states the exceptions and exclusions for this deal. Here is a close look at each of these two reasons.
Lists Requirements Of The Deal
A title commitment generally contains multiple sections, including:
- A section stating the commitment date, as well as the amount of insurance coverage, the policies that will be issued, and the interest in the owner and the property. The property is also typically described in the first section.
- A section detailing the requirements, exclusions, and exceptions. Examples of common requirements include tax payments, release of liens, proof of identity, and the act of recording the new deed and all loan documents. All of these actions help ensure a clean transfer title process. Failure to meet any of these requirements can impact escrow.
Shows Exceptions & Exclusions For Deal
The final section of a title commitment usually explains which things are not covered under a title insurance policy, or the exceptions. As a homeowner, you may be able to negotiate some of the exceptions, which can be removed or insured over with documents such as affidavits and releases. If any exclusion or exception ever appears strange to you, be sure to speak to a lawyer or an escrow officer for clarification. The terminology contained in a title commitment can often be difficult to understand immediately, so it’s important to ask any questions or concerns you may have about the stipulations.
In addition to exceptions, there may also be exclusions in a title commitment. All of the following are commonly listed exclusions:
- Rights relating to eminent domain, which refers to the authority of the federal government or of state or local municipalities to utilize private property for public purposes after just compensation has been paid
- Government regulations pertaining to how your property can be used (e.g. ordinances)
- Claims resulting from bankruptcy
If you do not secure a title commitment, you will likely know very little about what types of peculiar conditions (if any) come with your new property, such as right-of-way regulations or the existence of an external governing body (e.g. a condo association). Avoid becoming entangled in complex legal disputes and acquire a title commitment today.
Contact The Title Insurance Professionals
Speak to the experts at Mathis Title Company in Fairfax, Virginia for more information about the importance of a title commitment. We provide legal advice and real estate settlement services to buyers and sellers throughout Fairfax County.
Robin Mathis is an attorney who has more than 30 years of experience and who was sworn into the United States Supreme Court. She has performed thousands of closings, both small commercial and residential, and has extensive knowledge of both the buyer and seller sides of real estate transactions. Ann Andreatos is a title agent who has more than 14 years of experience in the real estate industry. She has an extraordinary capacity to spot errors in documents and track down lien releases.
Mathis Title can help you create a title insurance policy that works for you. We will hold the funds being transferred during the sale and purchase of your property in an escrow account prior to title transfer and closing. Upon approval of the title order from the escrow officer, the title search will begin and you will be issued a preliminary report to evaluate and approve. Call Mathis Title Company today at (703) 214-4020 or contact us online to learn more about our services.